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Banking

Infrastructure drives market growth

Mortgage-backed deals continued to dominate European structured finance in 2003 but deals funding complex infrastructure projects began to make a big splash, with monoline insurers taking on an indispensable role. Mark Brown reports.

Malcolm: issuers are
increasingly focused

EUROPE'S STRUCTURED FINANCE market enjoyed much good news in 2003. Many investors began the year by shifting allocations away from corporate bonds to more structured products, which offered higher ratings and lower volatility.

The even better news as Christmas approaches is that surges in issuance need not mean late nights in the office frantically trying to beat those December deadlines. Frequent borrowers are coming to the market more regularly to avoid oversupply in the fourth quarter.

"People have learned that the pipeline of deals is important for pricing," says Fraser Malcolm, head of ABS syndicate and trading at Dresdner Kleinwort Wasserstein. "In 2002, Q4 was crammed full of deals. Spreads moved out significantly, but this wasn't to do with quality. There has been a much more consistent supply this year."

The biggest single contribution to the European structured finance market came from mortgage-backed securitizations. According to figures from the European Securitization Forum, MBS issuance hit €59.7 billion in the first half of 2003, up 110% on the first half of 2002.

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